Considered
and decided by Willis, Presiding Judge; Lansing, Judge; and Hudson, Judge.

S Y L
L A B U S

I. A trademark is abandoned when its use has been discontinued
with intent not to resume such use.

II. Having “intent to resume” use of a trademark requires the
trademark owner to have plans to resume commercial use of the trademark.

III. A party claiming that a trademark has been abandoned must show
non-use of the name by the legal owner and no intent by that person or entity
to resume use in the reasonably foreseeable future.

IV. A trademark owner cannot protect a trademark by merely having
“an intent not to abandon,” which would allow a trademark owner to protect a
trademark with neither commercial use nor plans to resume commercial use.

O P I N I O N

HUDSON, Judge

In
this appeal, appellants RMZ of St. Cloud, Inc., argue that the trial court
erred in finding that RMZ abandoned a trademark and is therefore estopped from
denying the transfer of the trademark to respondents Birch Publications,
Inc. Because the trial court’s factual
findings were not clearly erroneous, and the trial court did not err as a
matter of law in concluding that RMZ abandoned use of the trademark, we conclude
that RMZ is estopped from denying the transfer of the trademark to Birch, and
we affirm.

FACTS

Ruth
Zulkosky and three others organized appellants RMZ of St. Cloud, Inc.[1]
(RMZ), in late 1998 to publish a business-telephone and internet
directory. RMZ published a telephone
directory known as “The MIDbook” in 1999 and 2000.

RMZ experienced financial difficulties, and in July
2000, Zulkosky asked Harold Anderson for financial help, and Anderson agreed to
help. In order to publish a directory
in 2001 and to provide a vehicle through which Anderson could provide financial
assistance, Anderson created respondent Birch Publications, Inc. (Birch). Between August 30, 2000, when Birch was
incorporated, and September 15, 2000, Anderson provided significant financial
assistance to RMZ, including cash-flow funding and equity contributions. Anderson also invested cash in Birch to fund
its initial business operations, and Birch purchased some of RMZ’s assets,
which was memorialized in a bill of sale.
The bill of sale does not mention a purchase of all assets or a separate
sale of the trademark name “The MIDbook.”
In the fall of 2000, Birch took over the RMZ office lease and hired
several RMZ employees, including Zulkosky, who was given principal
responsibility for the day-to-day operations of the Birch business.

On
September 20, 2000, RMZ filed a certificate of assumed name for “The MIDbook”
with the Minnesota Secretary of State.
The certificate was published in the St. Cloud Times on November 2,
2000. On November 10, 2000, Birch filed
a certificate of assumed name for “The MIDbook” with the Minnesota Secretary of
State. Birch published the certificate
in the St. Cloud Times on April 27, 2001.

A
Birch employee testified that Birch and RMZ had discussions regarding RMZ’s
inability to satisfy various debts, including debts to the Internal Revenue
Service. Birch and RMZ sought to find a
way to get RMZ money to satisfy the debts without using RMZ’s earned income. The discussions included reducing the
commissions paid to Zulkosky and a possible sale of the trademark name “The
MIDbook.” An attorney for RMZ prepared
an assignment of the trademark name, but the discussions broke down before the
assignment occurred.

On
March 2, 2001, Zulkosky drafted a letter to the Yellow Pages Publishers
Association (YPPA), which stated that “[t]he Corporation that presently owns
the MIDbook directory has changed effective October 1, 2000, from Quest [RMZ] .
. . to Birch Publications.” RMZ contends
that the letter was written so Birch could have permission to publish the 2001
directory, and Zulkosky testified she should have said Birch had permission to
use the name rather than stating that the ownership had changed.

In
September 2002, Birch underwent a staff reorganization and terminated several
of their employees, including Zulkosky.
On October 3, 2002, Zulkosky sent a letter to Birch’s CEO, Beverly Berg,
which stated that RMZ was withdrawing its permission to use the “MIDbook” name. Birch contends that both RMZ and Birch began
to sell advertising for a directory in the late fall of 2002 using the
“MIDbook” name.

In
November 2002, Birch and Anderson commenced an action against RMZ and Zulkosky,
seeking a temporary and permanent injunction to prevent RMZ from using the
trademark or trade name “MIDbook” in any business related to the publication of
a business-telephone directory. Birch
also sought monetary damages on promissory notes. RMZ filed an amended answer and a counterclaim seeking injunctive
relief prohibiting Birch from using the name “MIDbook.” On December 9, 2002, after a hearing, the
district court entered a temporary injunction prohibiting RMZ and Zulkosky from
using the MIDbook name for publication of a directory in 2003. Prior to trial, the parties resolved the
economic issues related to the promissory notes and other debts. On November 12, 2003, the trial court
entered a permanent injunction prohibiting RMZ and Zulkosky from using the name
“MIDbook” or any similar name or logo in connection with the publication of a
business-telephone directory. The trial
court found that RMZ negligently abandoned “The MIDbook” trademark and was
therefore estopped from denying the transfer of the trademark to Birch. Appellants filed this appeal.

ISSUES

I. Did the trial court err in finding RMZ
abandoned the MIDbook trademark?

II. Did
the trial court err in finding RMZ and Zulkosky are estopped from denying the
transfer of the MIDbook name to Birch?

ANALYSIS

On appeal from a bench trial, this
court’s scope of review is limited to determining whether the trial court’s
findings are “clearly erroneous and whether the court erred as a matter of
law.” Powell v. MVE Holdings, Inc.,
626 N.W.2d 451, 457 (Minn. App. 2001), review denied (Minn. Jul. 24,
2001). This court must give due regard to
the opportunity of the trial judge to determine the credibility of the
witnesses. Minn. R. Civ. P. 52.01. A trial court’s findings of fact will be
reversed only if this court is left with a definite and firm conviction that
the trial court has made a mistake. Gjovik
v. Strope, 401 N.W.2d 664, 667 (Minn. 1987). This
court exercises independent judgment on purely legal questions. Frost-Benco Elec. Ass’n v. Minnesota Pub.
Utils. Comm’n, 358 N.W.2d 639, 642 (Minn. 1984).

I

The
trial court found that RMZ abandoned the use of the trademark to Birch, but RMZ
contends that it did not abandon the MIDbook trademark because Birch did not
establish that RMZ intended not to resume the use of the trademark. Birch contends that the trial court
correctly found that RMZ abandoned the use of the trademark to Birch. Birch notes it hired Zulkosky, and there is
no evidence that she was acting in any capacity other than as a director or
employee of Birch. Birch further
contends that RMZ abandoned the MIDbook trademark through non-use and declared
its intention not to resume use through various actions and statements, such as
Zulkosky’s letter to the YPPA.

Under the Lanham Trademark Act, a
trademark is abandoned when “its use has been discontinued with intent not to
resume such use.” 15 U.S.C. § 1127
(2002).[2] A party claiming that a trademark has been
abandoned must show “non-use of the name by the legal owner and no intent by
that person or entity to resume use in the reasonably foreseeable future.” Emergency One, Inc. v. Am. FireEagle,
Ltd., 228 F.3d 531, 535 (4th Cir. 2000).
Mere non-use is not prima facie evidence of abandonment unless the
trademark has not been used for three consecutive years. See 15 U.S.C. § 1127. Having “‛intent to resume’ requires
the trademark owner to have plans to resume commercial use of the
trademark.” Hiland Potato Chip Co.
v. Culbro Snack Foods, Inc., 720 F.2d 981, 984 (8th Cir. 1983) (quoting Exxon
Corp. v. Humble Exploration Co., Inc., 695 F.2d 96, 102-03 (5th Cir.
1983)). The Lanham Trademark Act does
not permit a license for a trademark owner to merely have “an intent not to
abandon,” which would allow a trademark owner to protect a trademark with
neither commercial use nor plans to resume commercial use. Id.

Here,
the record shows that Zulkosky and RMZ ceased producing directories and RMZ
ceased being a viable business sometime in 2001; thus, Zulkosky and RMZ ceased
using the trademark in a commercial manner (i.e., to sell directories). Likewise, nothing in the record indicates that
they had immediate plans to resume commercial use of the trademark. In addition, RMZ allowed Birch to publicly
assume use of the trademark to sell directories, and Zulkosky voiced no
objection when Birch filed its assumed name registration with the Minnesota
Secretary of State and then published notice of that filing in the St. Cloud
Times. Zulkosky even wrote a letter to
the YPPA, which stated that “[t]he Corporation that presently owns the MIDbook
Directory has changed effective October 1, 2000, from Quest [RMZ] to Birch
Publications.” Zulkosky testified that
she should have said Birch had permission to use the name, and claimed that the
YPPA told her if she did not state that ownership had changed she would have to
“reregister and apply for a new name, a new directory code and PUB code, which
is all part of a directory name.”

Although Zulkosky claims now that Birch merely had
permission to use the name, we cannot ignore the fact that Zulkosky chose to
write the letter in a manner that clearly states that the corporation that
“owns” the MIDbook directory has changed.
Moreover, even if the YPPA suggested that Zulkosky use the ownership
language in the letter, as Zulkosky claims, she did not inform Birch that the
letter she wrote to the YPPA merely gave Birch permission to use the trademark;
nor did she give Birch written permission to use the trademark. Zulkosky’s silence is telling.

Zulkosky
also asserts that she hoped to revive RMZ as a viable business at some later
date, but her stated hope is weak evidence of intent not to abandon. The owner of a trademark cannot defeat an
abandonment claim by asserting a vague, subjective intent to resume use of a
trademark at some unspecified future date.
See Silverman v. C.B.S., Inc., 870 F.2d 40, 47 (2nd Cir.
1989). The actual conduct of the
parties suggests that Zulkosky had no immediate intention to revive RMZ. Rather, it appears the parties intended for
Zulkosky to have a management role in Birch and that she would have the
opportunity to acquire an ownership interest in Birch. As the trial court noted, “[T]he new entity
was producing the same product, under the same manager, but with
Mr. Anderson being the majority shareholder.” The trial court correctly concluded that Zulkosky “was using the
trademark every day in her role at Birch, but RMZ Publications was no longer
using [the trademark].”

We
conclude that the trial court’s findings were not clearly erroneous and that
the trial court did not err as a matter of law in concluding that RMZ abandoned
use of the trademark.

II

RMZ
further argues that the trial court erred by finding that RMZ negligently
abandoned the MIDbook trademark name and was estopped from denying the transfer
of the trademark to Birch. RMZ
contends that the trial court failed to consider all of the evidence presented
at trial and instead relied solely on the letter Zulkosky wrote to the
YPPA. Birch contends that the trial
court correctly found that the conduct of the parties supports the estoppel
claim. In support of its position,
Birch notes that it reasonably relied on the words, actions, and silence of
Zulkosky and contends that it acquired RMZ’s business and the MIDbook name.

A party seeking to invoke the
doctrine of equitable estoppel has the burden of proving three elements: (1)
that the promise or inducement was made; (2) that it has reasonably relied upon
the promise; and (3) that it will be harmed if estoppel is not applied. Hydra-Mac, Inc. v. Onan Corp., 450
N.W.2d 913, 919 (Minn. 1990). An
equitable-estoppel claim arises when

one by his acts or
representations, or by his silence when he ought to speak, intentionally or
through culpable negligence, induces another to believe certain facts to exist,
and such other rightfully acts on the belief so induced in such manner that if
the former is permitted to deny the existence of such facts it will prejudice
the latter.

Here,
there is considerable evidence that Zulkosky’s conduct, words, and silence when
she should have spoken, induced Anderson and Birch to make a substantial
investment of time and money to create a viable business using the MIDbook
name. First, Anderson created Birch to
keep the underlying business of RMZ alive using the MIDbook name. Anderson invested thousands of dollars to
create Birch, buy RMZ’s office equipment, take over RMZ’s lease, hire RMZ
employees, and fund Birch’s cash shortfalls.
Second, Anderson rejected Zulkosky’s proposal that he buy an interest in
RMZ. Anderson’s assistant participated
in the initial meetings between Zulkosky and Anderson, and she testified that
Anderson would only help RMZ by creating “a new company using the MIDbook
name.” Third, Zulkosky voiced no
objection when Birch filed its assumed-name registration with the Minnesota
Secretary of State and then published notice of that filing in the St. Cloud
Times. Finally, Zulkosky wrote the letter
to the YPPA, which stated that “[t]he Corporation that presently owns the
MIDbook directory has changed effective October 1, 2000, from Quest [RMZ] to
Birch Publications.” The trial court
was correct when it noted “[t]hat letter does not discuss that the trademark
was by permission or by license, but was now owned by Birch.” Based on all of the above, the first element
of equitable estoppel has been satisfied because Zulkosky’s conduct, words, and
silence when she should have spoken induced Anderson and Birch to make a
substantial investment of time and money to create a viable business using the
MIDbook name.

Based
on the facts described above, the trial court properly concluded that Anderson
and Birch reasonably, and in good faith, relied on Zulkosky’s conduct, words,
and silence when she should have spoken.
As the trial court correctly noted “Anderson clearly relied both upon
[Zulkosky’s] presence and the trademark use when making his investment in Birch. Officers of Plaintiff Birch Publications
relied upon this continuing belief when pouring business efforts and goodwill
into the trademark.” Accordingly, the
second element of equitable estoppel has been satisfied because Birch
reasonably, and in good faith, relied on Zulkosky’s inducement.

Finally,
Birch and Anderson will be harmed if Birch loses the opportunity to continue to
use the name MIDbook in the operation of the business. Birch believed that they had full ownership
of the name MIDbook for two years, and during that time Birch added value to,
commercially used, and poured business efforts and goodwill into the trademark.

D E C I S I O N

The
trial court’s findings were not clearly erroneous, and the trial court did not
err as a matter of law in concluding that RMZ abandoned use of the trademark
and that RMZ is estopped from denying the transfer of the trademark to Birch.

Affirmed.

[1] At the time it was formed,
RMZ of St. Cloud, Inc., was known as Quest Publications, Inc. The name change from Quest Publications to
RMZ of St. Cloud, Inc., was the subject of other litigation, which has no
bearing on this case. For clarity, we
refer to appellants as RMZ throughout this opinion.